March 18th, 2025

As global investors move away from China due to geopolitical risks, India is set to capture more capital, driven by its stable economic environment, growing digital economy, and entrepreneurial ecosystem

The surge in China equities and declines made by Indian markets in the past few months has narrowed the valuation premium between the two countries.

India’s valuation premium over Chinese equities has shrunk to about one standard deviation (SD) below the historical average.

“The 12-month forward PE trend shows a decline from levels above +2 SD in early 2021 to the current range, reflecting a relative de-rating. Despite this narrowing, India maintains a valuation premium over China, potentially supported by stronger fundamentals and higher investor confidence,” said a note by YES Securities.

Excerpts from the interview have been covered here on the Hindu Business Line website :- https://www.thehindubusinessline.com/markets/india-narrows-valuation-gap-with-china/article69345157.ece

Posted by Siddharth Mehta, Founder & Managing Partner